Broadcast August 16, 2001
Just about the only thing George W. Bush and Al Gore agreed on during that interminable campaign last year was a prescription drug benefit for the elderly. Well, the first 100 days of the Bush administration came and went and still no prescription drug benefit, which isn't surprising. Prescription drugs are like the thread sticking out on a tattered sweater. Pull on it and all of Medicare starts to unravel.
The recent budget agreement earmarks $300 billion over the next 10 years for prescription drugs. But that'll cover only a fraction of what the elderly are expected to pay for drugs. The president wants the elderly to join for-profit buying clubs that would negotiate with drug companies for lower rates. The idea is that when elderly people combine this way, they'll have more market power relative to the drug companies.
But drug companies already have huge market power that's not going to erode simply because they have to deal with some buying clubs. It would be a different story if all Medicare enrollees were together in one huge buying club that directly negotiated volume discounts from prescription drug manufacturers, but that's not the president's plan.
The real problem is that drug prices are skyrocketing because prescription drugs are where the action is in medical care. Drug companies are spending billions in research and they're determined to get a return on their investments.
This is just the beginning. We're on the verge of huge medical breakthroughs dealing with cancer, heart disease, immunity disorders, neurological disorders, brain functions.
And the baby boomers -- tens of millions of whose bodies and minds will deteriorate over the next two decades -- want access to all of it. Do not underestimate the political power of the baby boom generation or their determination to prolong their lives at any cost.
There's the rub: the cost. Whatever prescription drug benefit finally emerges will grow like topsy because there's almost no limit to the wonders of biotechnology and certainly no limit to the insistence by a growing number of elderly people that they're entitled to those wonders.
You think Medicare is costly as is? Eventually, if nothing's done to ration access to prescription drugs or control drug prices, two decades from now just about everything the federal government spends, other than the military, will be spent on the elderly.